March 18, 2012

Getting Grounded

SUNDAY, MARCH 18, 2012: Arrived in Amsterdam about 8:30 am local time. Taxis to the hotel where we meet up with our host Cary Sifferath, director of Mediterranean and Africa initiatives for the U.S. Grains Council.

Cary gave us a briefing on the grain and commodity markets in the European Union, which is comprised of 27 nations. Some highlights and points of interest:

• Due to its geographic size and diversity, the EU is frequently an importer and an exporter of grain, depending on the EU member involved. A sale of grain from one EU nation to another is not considered an "export" but is deemed an "internal" trade.

• The largest corn producing nations in the EU are France, Romania, Italy, and Hungary.

• Spain, Portugal and the Netherlands are feed grain deficient.

• Ethanol and biodiesel production are on the grow in the EU. Many ethanol plants switch feedstocks frequently between corn, wheat, barley and sorghum based on commodity price. An interesting aside: Rapeseed from the Chernobyl area is being used for biodiesel production. It's one of the few crops that can be grown in that former site of nuclear disaster because rapeseed does not take up radioactive materials.

• A new Syngenta event (MIR162) is now in the approval process and its presence in the U.S. corn supply has halted corn and corn co-product exports to the EU. While this typically would only involve imports from the U.S., MIR162 has been found in corn from Brazil and Argentina as well. These countries would usually be the first alternative for corn buyers in the EU, but now these two major suppliers are also shut off—and the result is that trade in corn and corn co-products to the EU has essentially halted. The review process for MIR162 is underway, and while it is technically supposed to occur within six months of the request, the clock stops frequently as questions are asked, challenges made and information compiled. Cary believes that it could be early 2013 before MIR162 completes the process. But in the meantime, more events will be introduced—and the cycle will continue.

• Approval of single biotech events has led to de facto approval of some stacked trait corn. After all, once the corn is ground through processing (or even ground for biotech testing), it is impossible to tell if the events present are there individually or as a result of a stacked hybrid.

• Cary characterized the trade of U.S. corn and corn co-products (DDG and corn gluten feed) as "tricky" since they are heavily dependent on biotech issues. In November 2009, the approvals of several individual biotech events (and the de facto stacked traits) opened trade on corn and corn co-products. This had a significant impact on U.S. exports of corn and corn co-products to the EU. For example, exports of distillers grains to the EU were about 124,000 metric tons in 2009. After the approvals, that number rocketed to more than 451,000 in 2010...and grew to nearly 550,000 through October 2011. Then MIR162 came along—and there has been no DDG exports to the EU since. None!

Corn exports stood at 61,000 metric tons in the 2009/10 crop year—and then soared to 972,000 in 2010/11. Since the advent of MIR162, only 1,100 tons have been exported in the 2011/12 year (through March 8.)

• The Ukraine is expected to export a significant amount of corn this year. A dry fall and a killing winter took out much of their wheat crop...and Ukrainian farmers are expected to replant to corn, and plenty of it. Additionally, U.S. wheat is being imported for feed use.

• Despite its best efforts, the EU will likely see more evidence of GMOs in its grain supplies. One reason is that illegal GMO seed is being smuggled, which could easily being to affect a larger percentage of production in some countries in which this smuggling is rampant.

• GMOs and biotechnology are convenient whipping boys in political rhetoric and bravado—with non-issues becoming frontpage news as a result. On the other hand, many feel as though the EU is being left behind in terms of agricultural production and economic success due to its reluctance to embrace technology that is being used in other areas of the world.

We begin our mission in earnest on Monday as John Brook from the U.S. Meat Export Federation joins the group and we visit two large importers of U.S. beef.

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